Edwards Greene Tax Tips 2020

KEY GUIDE | April 2019 | Tax Planning Tips 3 Tax planning tips 20 | Tax Pla in Tips can prevent the overpayment occurring in the first place by deferring payment of NICs on one of your jobs by sending HMRC a completed form CA72A (either online or by post) by 14 February in the tax year, but ideally earlier. 4 Tell HMRC which of your properties should be treated as your main home for tax purposes when you buy a second (or even third) home. The property that has always been your main home is free of capital gains tax (CGT) on sale or disposal. Any other property where you have lived for part of the time will attract a CGT exemption for the periods you have lived there and have elected for it to be your main home. If a property has been your nominated main home at any time, the gain for the last nine months of ownership (36 months if moving into residential care) is free of tax, even if you do not live there during that final period. The same exemption may not apply if the property is situated overseas. 5 If you and your partner both own homes when you marry/begin a civil partnership, you need to nominate one property as your main home within two years of your marriage/civil partnership. Once married, you can have only one main home between you for tax purposes. If you both own separate properties which you continue to occupy for some periods, nominate the one that is likely to make the best use of your CGT main residence exemption, otherwise HMRC will designate the home that you occupy for the majority of your time as your main residence. Personal and family planning 1 Check your PAYE tax code. HMRC now changes tax codes dynamically when your salary changes, but the HMRC computer has trouble distinguishing between a temporary increase, such as a bonus, and a permanent pay change. Your tax code may also include estimated amounts of savings income, based on what you received in an earlier year. You can ask HMRC to remove this estimated income, and correct any other errors, through your online personal tax account. 2 Can you use the transferrable amount of personal allowance? Married couples and civil partners can share 10% of their personal allowance between them. The unused allowance of one partner can be used by the other, meaning an overall tax saving for the couple. The amount you can transfer is £1,250 for 2020/21 and a transfer is not permitted if the recipient partner pays tax at a rate higher than the basic rate of 20% (higher than the intermediate rate of 21% for Scottish taxpayers). 3 Check how much you are paying in national insurance contributions (NICs). If you have more than one job, you may overpay NICs during the tax year. You can reclaim any overpaid NICs from HMRC after the end of the tax year. However, you EXAMPLE Leila is employed on an annual salary of £45,000, but her husband does not have any income. For 2020/21, they could save tax of £250 (£1,250 at 20%) by sharing the husband’s personal allowance. Tip If a property has been your nominated main home at any time, the gain for the last nine months of ownership is free of tax.